Why ‘Everybody Would Feel the Heat’ if Something Goes Wrong in China’s Economy
SputnikNews.com
27.06.2017
Risks brewing in China and other emerging markets risk triggering a new global financial crisis, according to a report by an influential group of central bankers.
Emerging economies such as China and Thailand are showing the same signs of overheating seen in the United States and Britain ahead of the global financial crisis of 2007-2008, according to the annual report of the Bank for International Settlements (BIS).
Claudio Borio, the head of the BIS monetary and economic department, warned that the current period of global economic growth could end and the next financial crash could arrive “with a vengeance.”
“Leading indicators of financial distress point to financial booms that in a number of economies look qualitatively similar to those that preceded the global financial crisis,” Borio said.
According to the report, China and other emerging markets avoided many of the disastrous effects of previous crises, but now rising debt levels in China could make its economy more vulnerable to rising interest rates or a shock from lower demand. China’s corporate debt increased nearly twofold since 2007 to reach 166 percent of GDP, while household debt grew to 44 percent of GDP in 2016.
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